Majesco Entertainment Company Reports Fourth Quarter and Year-End Fiscal 2009 Financial Results

- Fiscal 2009 Net Revenues Increased 48% to $94.5 Million -


EDISON, N.J., Jan. 14  /PRNewswire-FirstCall/ -- Majesco Entertainment Company (NASDAQ:COOL), an innovative provider of video games for the mass market, today reported financial results for the fourth quarter and full year ended October 31, 2009.

For the fourth quarter ended October 31, 2009, Majesco's net revenues increased 32.8 percent to $23.9 million versus $18.0 million in the same period a year ago. During this same period, the Company reported an operating loss of $5.5 million, compared to operating income of $0.4 million in the fourth quarter of 2008. Non-GAAP operating loss was $5.0 million versus non-GAAP operating loss of $0.4 million in 2008. Net loss for the quarter was $4.5 million versus net income of $0.4 million in 2008. On a non-GAAP basis, net loss for the quarter was $5.4 million compared to non-GAAP net loss of $0.7 million last year.  The quarter non-GAAP operating and net losses include a $3.2 million charge for 2010 games that were cancelled or impaired.

The Company's basic and diluted net loss per share for the quarter ended October 31, 2009 was $0.14 compared to net income per basic and diluted share of $0.01 in the same period last year. Non-GAAP basic and diluted net loss per share was $0.16 compared to a net loss per share of $0.03 last year.

The $0.16 non-GAAP net loss per share for the quarter includes $0.10 from the $3.2 million for cancelled or impaired 2010 games. Excluding these impairments, the non-GAAP net loss was $0.06.

For the twelve months ended October 31, 2009, the Company's net revenues increased 47.8 percent to $94.5 million versus the year ago period. During this same period, the Company reported an operating loss of $6.6 million compared to operating income of $2.8 million in the same 2008 period. Non-GAAP operating loss for the twelve month period was $3.0 million compared to non-GAAP operating income of $3.2 million for the comparable 2008 period. Net loss through the twelve months of fiscal 2009 was $7.2 million versus net income of $3.4 million in the comparable 2008 period. Non-GAAP net loss was $4.4 million for fiscal 2009 compared to net income of $2.5 million in the same 2008 period.

The twelve months non-GAAP operating and net losses include a $3.2 million charge for 2010 games that were cancelled or impaired.

The Company's basic and diluted net loss per share for the twelve months ended October 31, 2009 was $0.24 compared to net income per share for the twelve months ended October 31, 2008 of $0.12. The Company's non-GAAP basic and diluted net loss per share for the twelve months ended October 31, 2009 was $0.15 compared to net income per share of $0.09 in the comparable 2008 period.

The $0.15 non-GAAP net loss per share for the twelve months includes $0.11 from the $3.2 million for cancelled or impaired 2010 games. Excluding these impairments, the non-GAAP net loss was $0.04.

While the Company was able to exceed its revenue guidance of $85 million to $90 million with $94.5 million in net sales, its non-GAAP net loss of $0.15 per share was $0.25 per share below guidance of $0.10 to $0.14.  Specifically, the EPS performance was negatively impacted by the following:

  --  $0.10 per share for the quarter and $0.11 per share for the twelve
      months for the cancellation or impairment of 2010 titles;
  --  $0.05 per share for the poor performance of Our House: Party Wii and
      DS;
  --  $0.04 per share for the underperformance of new IP titles;
  --  poor international performance;
  --  higher percentage of lower margin distribution sales.



Our House: Party had worse than expected sell-in, in addition to weak sell-through which led to higher allowances and acceleration of amortization from 2010. In addition, our new IP titles had weaker than expected sell-in and minimal reorders which led to higher allowances and accelerated amortization. This was indicative of a difficult retail environment that was especially hard on non-branded and new IP titles. Third, the international business suffered from a weak European packaged goods market and had delays in the release of some of its titles. Much of the shortfall in other titles was offset by higher sales of lower margin product. Lastly, based on sales performance during the holiday season, the Company evaluated its 2010 portfolio and cancelled certain titles and wrote down others scheduled for release in 2010.

Jesse Sutton, Chief Executive Officer of Majesco, said, "In 2009 we delivered a strong top line performance, exceeding our revenue guidance, despite a challenging economic environment and a difficult period for our industry overall.  Our top line was driven by the Cooking Mama franchise, Jillian Michaels' titles and strong distribution revenue.  However, we were disappointed in our inability to translate this strong growth to the bottom line.  While our top titles performed well, and we successfully maintained costs and reduced marketing expenditures, we had a soft retail performance from new IP titles in the fourth quarter.  Based on our experience this holiday season, and our view of the video game retail environment, we carefully reviewed our 2010 title slate and either cancelled or took impairment charges against a number of titles planned for release during 2010, primarily for Wii(TM). This charge was approximately $3.2 million or $0.10 per share in the quarter."

"In 2010 we must translate our revenue into profitability and this is the key focus for our management team.  We are taking a number of steps to better position the Company for 2010 and beyond.  We are well capitalized and in that regard, in better financial position than we've been in recent years. We are looking to focus our resources on our best opportunities, publishing fewer, but stronger titles than we initially planned and driving additional efficiencies across our operations by reducing our cost structure.  We recently implemented personnel reductions in both the U.S. and Europe, lowering headcount by 17 percent. These personnel changes will leave our worldwide headcount 30 percent below the end of fiscal 2008. In addition, we made a number of other cost improvements during the year, including lowering the cost of our rent and some outside services that will provide further savings as we move into 2010. Including the elimination of costs of our studio, the reductions in international and reductions in overhead in the U.S., we've reduced costs by in excess of $3 million. We believe our efforts will result in profitability on a lower revenue base, which is reflected in our fiscal 2010."

"Our product focus in 2010 will also include leveraging our success with the Cooking Mama franchise. During this holiday season we launched the third Nintendo DS(TM) SKU in the Cooking Mama series. The title performed well, extending the reign of Mama as the most successful third party franchise on the DS and reinforcing its position as an evergreen brand. In addition, in 2009 we introduced our first line extension, in Gardening Mama, which was very successful, and we are presently working on two additional extensions for 2010. We also continue to explore opportunities to expand the reach of the Mama brand to her fans through new media channels."

  Financial Highlights

  --  Fourth quarter 2009 net revenues for the U.S. were $23.1 million, an
      increase of $8.2 million or 55 percent compared to the same quarter
      last year. Fourth quarter 2009 international sales were $0.8 million,
      a decrease of $2.3 million or 74 percent compared to the same period
      of 2008.
  --  For the twelve months of fiscal 2009, net revenues for the U.S. were
      $90.4 million, an increase of $32.5 million or 56 percent compared to
      the same period last year. International sales for the same period
      decreased $1.9 million or 32 percent compared to the same period last
      year.
  --  Net Sales for Wii increased $2.3 million, or 24.5 percent, to $11.6
      million for the fourth quarter of fiscal 2009. Nintendo DS(TM) sales
      for the same period increased 43.5 percent, from $8.4 million to $12.0
      million.
  --  For the twelve months of fiscal 2009, Wii sales increased $28.3
      million, or 130.2 percent, to $50.1 million. Nintendo DS sales for the
      same period increased 2.7 percent from $39.4 million to $40.5 million.
  --  For the twelve months ended October 31, 2009, the majority of the
      increase in selling and marketing compared to the same period a year
      ago was the result of variable selling and marketing expenses related
      to higher revenues.
  --  In the fourth quarter of 2009, the decrease in gross profit percentage
      was particularly impacted by Our House: Party, soft sales of new IP
      titles, and weak international performance which impacted results
      $0.05 per share, $0.04 per share and $0.03 per share, respectively. 
      The difficult retail environment resulted in lower initial orders,
      lower or no re-orders on new IP titles and higher promotional costs
      and allowances. The international business was impacted by industry
      wide softness in Europe and the slippage of some titles into 2010.
  --  In the fourth quarter, selling and marketing expenditures were 12.8
      percent of sales, up from 10.7 percent last year.  As expected,
      selling and marketing expenditures were down 128 basis points from
      third quarter 2009 levels, resulting from lower marketing
      expenditures.
  --  The results also include a $3.2 million expense for 2010 titles which
      were cancelled or for which the Company took an impairment charge.
      This impacted results by $0.10 per share in the quarter and by $0.11
      per share for the twelve months.
  --  At the end of the fourth quarter, the Company had in excess of $11.8
      million in cash and cash equivalents.  As expected, during the quarter
      the Company built its inventory in anticipation of the holiday sales
      period.  This inventory has subsequently sold through in the first
      quarter of 2010 and the Company expects to have a stronger cash
      position at the end of the first quarter.


  Announced Product Line-up

  First Quarter Fiscal 2010 Ending January 31, 2010


To date, the Company has announced the following titles that were or are expected to be released during its fiscal first quarter 2010, which includes the holiday sales period:

  --  Alvin and the Chipmunks: The Squeakquel for Wii and Nintendo DS
      launched in advance of the theatrical release of the same name that
      opened on December 24, 2009.  Featuring songs from the Grammy and
      American Music Award-winning Alvin and The Chipmunks library, this
      rhythm action game lets players star as The Chipmunks, their
      girl-group counterparts The Chipettes, or both as they rock out on the
      ultimate worldwide tour.
  --  My Hero: Firefighter and My Hero: Doctor for Nintendo DS let players
      experience firsthand the heroic acts of the role models they look up
      to. In My Hero: Firefighter, players use the stylus as a fire hose,
      ladder and ax as they complete 13 varied missions relating to fire
      emergencies and courageous rescues. In My Hero: Doctor, players take
      on the role of a doctor's apprentice as they manage 10 major medical
      emergencies by utilizing the microphone and stylus as an all-in-one
      medical tool.
  --  Hello Kitty Party for Nintendo DS lets players help Hello Kitty and
      SANRIO® friends - including Keroppi®, Badtz-Maru®, My Melody® and
      others - plan and throw a party in 25 different mini-games. After
      sending out personalized party invitations, players will design and
      iron the perfect dress; shop for party fare; play puzzles and match
      games; cook food; and dress Hello Kitty in a variety of outfits and
      accessories.
  --  Serious Sam HD: The First Encounter for Xbox LIVE Arcade is re-tooled
      and re-vamped in high definition with an all-new version of the
      CroTech engine.  Based on the original indie arcade shooter sensation
      Serious Sam: The First Encounter, Serious Sam HD features stunningly
      redesigned visuals, over the top action and intense online co-op for
      up to four players.


  Fiscal 2010


To date, the Company has announced the following titles that are expected to be released during the rest of fiscal 2010:

  --  The Daring Game for Girls for Wii and Nintendo DS is based upon the
      best-selling how-to-book, The Daring Book for Girls, the ultimate
      can-do, how-to 'manual' that celebrates the female spirit. The games
      guide adventurous girls in a range of daring and practical activities
      from building a campfire to exploring caves, tending a garden,
      crafting items, playing sports and games, and making new friends.
  --  Flip's Twisted World for Wii, a Gamespot E3 '09 Editor's Choice award
      finalist, is a unique puzzle platformer that stars Flip, a magician's
      apprentice who mistakenly gets sucked into an alternate universe where
      up and down are only a matter of perspective. Players will help Flip
      navigate his puzzling world by rotating the environment 90 degrees in
      any direction with a simple twist of the Wii Remote.
  --  Attack of the Movies 3-D is the first-ever 3-D shooter designed
      exclusively for Wii(TM). The game transports players into six
      fantastic movie-themed worlds and features classic enemies culled from
      the annals of film history. The game also comes packaged with four
      pairs of 3-D glasses to support four-player multiplayer action.
  --  Dance Sensation! for Wii is the only game that lets players train and
      perform routines in four different styles: Hip-Hop, Jazz, Ballet, and
      Latin Ballroom. Players use the Wii Remote and Nunchuk to control
      their on-screen dancer as she perfects more than 160 real
      motion-captured dance moves in recitals ranging from local auditoriums
      to the Broadway stage.
  --  Pizza Delivery Boy for Wii lets players use the Wii Remote as an
      all-in-one kitchen utensil and driving wheel to cook and deliver
      pizzas to hungry customers in three bustling towns. Players must
      beware, though, as a number of obstacles stand between them and the
      coveted title of Pizza Boy of the Year.
  --  Pirates Plundarrr for Wii is a fun and frantic beat-'em-up that lets
      players hunt the high seas for the renegade captain Rudebelly who has
      stolen the Scepter of Power and unleashed an army of cursed dead and
      menacing bosses. Would-be pirates will fight through 45
      creature-filled levels to retrieve their stolen treasure, and four
      mates can even plunder together in a party style, battle royale.
  --  Super Speed Machines for Nintendo DS lets players kick it into high
      gear in this frantic arcade racer that delivers super speed and
      dangerous conditions at every turn.
  --  Dawn of Heroes for Nintendo DS is a tactical role playing game that
      combines classic RPG concepts--including character development, epic
      combat, quests and puzzles--with a humorous style.
  --  Let's Draw for Nintendo DS is based on the popular Japanese book
      series that teaches kids how to draw by combining basic shapes. With
      more than 100 objects to draw and fun art related mini games that let
      young players animate their creations, kids can learn to draw
      anywhere, at any time.
  --  Data East Arcade Classics for Wii lets players re-live their arcade
      marathons with 15 nostalgic titles including BurgerTime and its
      sequel, Peter Pepper's Ice Cream Factory, Bad Dudes vs. Dragon Ninja,
      Burnin' Rubber, Heavy Barrel, Caveman Ninja, and many others.
      Featuring special updates for modern gamers, all titles also support
      single player and 2-player head-to-head or co-operative multiplayer
      play.
  --  Tetris® Party Deluxe for Wii and Nintendo DS represents a strategic
      partnership with Tetris Online, Inc. to support the North American
      launch and distribution of the two newest additions to the Tetris
      franchise. Tetris is one of the leading and most distinctive video
      game brands and franchises in the world. In the game's 25-year
      history, over 125 million units have been sold. Loved globally by
      people of all ages and all cultures, the Tetris game continues to be
      one of the most widely recognized video games of all time.
  --  Ghostwire: Link to the Paranormal for Nintendo DSi turns your handheld
      into a portal to the astral plane. Coupled with the DSi camera, this
      detection and communication tool lets you find, summon, capture and
      interact with ghosts living amongst us. Ultimately you can help them
      find peace as you develop your own paranormal prowess within an
      augmented reality that promises to change your perspective forever.
  --  Zumba® Fitness for to be announced systems is a one-of-a-kind exercise
      program that pairs Latin rhythms with red-hot international dance
      steps so you can have a blast as you party your way into shape.
      Through invigorating, high calorie-burning fitness classes, Zumba®
      Fitness has helped melt the pounds and inches off more than five
      million Zumba-enthusiasts in more than 75 countries.


  Fiscal 2010 Outlook


The Company expects fiscal 2010 full year net revenue of approximately $80 million.  The Company expects non-GAAP earnings per share to be approximately $0.05 for the fiscal 2010 full year.  The Company's guidance assumes the release of approximately 37 SKUs in 2010, including 14 DS and 16 Wii.  The Company's results are also impacted by seasonality from the December holiday period and variability based on release schedules.

Conference Call

At 4:30 PM ET today, management will host an earnings conference call. To access the call in the U.S., please dial 1-412-858-4600. The access code for the call is "Majesco". Please dial in approximately 10 minutes prior to the start of the conference call. The conference call will also be broadcast live over the Internet and available for replay for 90 days from the "Investor Info" section of the Company's Web site at http://www.majescoentertainment.com/. In addition, a replay of the call will be available via telephone for seven days beginning approximately two hours after the call. To listen to the telephone replay in the U.S., please dial 1-877-344-7529 and for international callers, dial 1-412-317-0088. Enter access code 436567.

Generally Accepted Accounting Principles (GAAP) and Non-GAAP Metrics

To facilitate a comparison between the three and twelve months ended October 31, 2009 and 2008, the Company has presented both GAAP and Non-GAAP financial results. GAAP financial measures, including operating income, net income, and basic and diluted earnings per share, have been adjusted to report certain Non-GAAP financial measures.

These Non-GAAP financial measures exclude the following items from the Company's condensed consolidated statements of operations:

  --  Expenses related to non-cash compensation
  --  Net proceeds from sale of certain state income tax net operating loss
      carryforwards
  --  Settlement charges related to the settlement of class action
      litigation
  --  Change in fair value of warrants
  --  Expenses for the California studio which was closed in the fourth
      quarter fiscal 2009



These Non-GAAP measures are provided to enhance investors' overall understanding of the Company's current financial performance and the Company's prospects for the future. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results.

For more information on these Non-GAAP financial measures, please see the tables in this release captioned "Reconciliation of GAAP and Non-GAAP Financial Measures".

About Majesco Entertainment Company

Majesco Entertainment Company is a provider of video games for the mass market.  Building on more than 20 years of operating history, the company is focused on developing and publishing a wide range of casual and family oriented video games on Wii(TM), Nintendo DS(TM) and other leading systems.  Product highlights include Cooking Mama(TM), Tetris® Party Deluxe, Alvin and the Chipmunks: The Squeakquel and Jillian Michaels' Fitness Ultimatum.  The company's shares are traded on the Nasdaq Stock Market under the symbol: COOL. Majesco is headquartered in Edison, NJ and has an international office in Bristol, UK.  More information about Majesco can be found online at http://www.majescoentertainment.com/.  @Majesco is on twitter or at http://www.twitter.com/majesco.

Safe Harbor

Some statements set forth in this release, including the estimates under the headings "Outlook" contain forward-looking statements that are subject to change. Statements including words such as "anticipate", "believe", "estimate" or "expect" and statements in the future tense are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-looking statements. Some of the factors which could cause our results to differ materially from our expectations include the following: consumer demand for our products, the availability of an adequate supply of current-generation and next-generation gaming hardware, including but not limited to Nintendo's DS and Wii(TM) platforms; our ability to predict consumer preferences among competing hardware platforms; consumer spending trends; the seasonal and cyclical nature of the interactive game segment; timely development and release of our products; competition in the interactive entertainment industry; developments in the law regarding protection of our products; our ability to secure licenses to valuable entertainment properties on favorable terms; our ability to manage expenses; our ability to attract and retain key personnel; adoption of new accounting regulations and standards; adverse changes in the securities markets; our ability to comply with continued listing requirements of the Nasdaq stock exchange; the availability of and costs associated with sources of liquidity; and other factors described in our filings with the SEC, including our Annual Report on Form 10-K for the year ended October 31, 2008. We do not undertake, and specifically disclaim any obligation, to release publicly the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

  MAJESCO ENTERTAINMENT 2010 RELEASE SCHEDULE




  2010 GAMES
  ----------

  Quarter 1
  Alvin and the Chipmunks: The Squeakquel Wii ($39.99) and DS ($29.99)
  My Hero: Firefighter DS, $19.99
  My Hero: Doctor DS, $19.99
  Hot and Cold: A 3D Hidden Object Adventure DSiWare, 800 points
  A Boy and His Blob: Trouble on Blobolonia, Virtual Console, 500 Wii
   Points
  Hello Kitty Party, DS, $29.99
  Serious Sam HD: The First Encounter XBLA, 1200 points

  Quarter 2
  Pirates Plundarrr Wii, Price TBA
  Flip's Twisted World Wii, Price TBA
  The Daring Game for Girls Wii ($29.99) and DS ($19.99)
  Pizza Delivery Boy Wii, $29.99
  Dance Sensation! Wii, $29.99
  Let's Draw DS, $19.99
  Super Speed Machines DS, $19.99
  Dawn of Heroes DS, $29.99
  Data East Arcade Classics Wii, $19.99

  Quarter 3
  Tetris Party Deluxe Wii and DS, Price TBA
  Attack of the Movies 3-D Wii, $29.99

  Quarter 4
  Zumba Fitness, System and Price TBA
  Ghostwire DSi, Price TBA



  MAJESCO ENTERTAINMENT COMPANY
  UNAUDITED SUPPLEMENTARY PRODUCT DATA




                 Net Revenue by Platform - Yearly

                          FY09           FY08           FY07
                         Actual         Actual         Actual
                         ======         ======         ======
  CONSOLE:
               Wii          53.0%          34.0%          19.6%
               PS2           0.0%           1.0%           6.9%
               Xbox          1.1%           0.2%           3.2%
                             ---            ---            ---
                            54.1%          35.2%          29.7%

  HANDHELD:
               DS           42.8%          61.7%          55.5%
               GBA           0.0%           0.1%           5.6%
               PSP           0.1%           1.1%           3.0%
                             ---            ---            ---
                            42.9%          62.9%          64.1%

  OTHER                      3.0%           1.9%           6.2%

  TOTAL                    100.0%         100.0%         100.0%




  Net sales by Platform for three and twelve months
  (Unaudited, in thousands)




                            Three Months Ended October 31,
                            ------------------------------
                        2009        %            2008        %
                        ----       ---           ----       ---
  Nintendo Wii        11,562       48.4%        9,284       51.6%
  Nintendo DS         12,000       50.2%        8,365       46.5%
  Other                  339        1.4%          343        1.9%
                         ---        ---           ---        ---
  TOTAL               23,901      100.0%       17,992      100.0%
                      ======      =====        ======      =====






                              Twelve Months Ended October 31,
                              -------------------------------
                           2009        %            2008        %
                           ----       ---           ----       ---
  Nintendo Wii           50,062       53.0%       21,746       34.0%
  Nintendo DS            40,472       42.8%       39,390       61.7%
  Other                   3,918        4.2%        2,751        4.3%
                          -----        ---         -----        ---
  TOTAL                  94,452      100.0%       63,887      100.0%
                         ======      =====        ======      =====



  MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
  CONSOLIDATED STATEMENTS OF OPERATIONS
  (In thousands, except share amounts)





                              Three Months Ended        Twelve Months Ended
                                  October 31,               October 31,
                                  -----------               -----------
                                 2009        2008        2009        2008
                                 ----        ----        ----        ----
  Net revenues                $23,901     $17,992     $94,452     $63,887
                              -------     -------     -------     -------
  Cost of sales

    Product costs              12,504       9,335      39,699      28,881
    Software
     development
     costs and
     license fees               8,077       3,663      29,329      11,917
    Loss on
     impairment of
     software
     development
     costs - future
     releases                   2,515           -       2,515           -
                                -----         ---       -----         ---
                               23,096      12,998      71,543      40,798
                               ------      ------      ------      ------
  Gross profit                    805       4,994      22,909      23,089
                                  ---       -----      ------      ------
  Operating costs and expenses

    Product research
     and development              767         694       4,672       3,306
    Selling and
     marketing                  3,070       1,921      14,618       8,628
    General and
     administrative             1,742       3,098       8,557       9,549
    Depreciation and
     amortization                  54          78         263         300
    Loss on
     impairment of
     software
     development
     costs -
     cancelled games              635         101         966         101
    Settlement of
     litigation and
     related charges,
     net                            -      (1,250)        404      (1,572)
                                  ---      ------         ---      ------
                                6,268       4,642      29,480      20,312
                                -----       -----      ------      ------
  Operating (loss)
   income                      (5,463)        352      (6,571)      2,777
  Other expenses (income)

    Interest and
     financing costs,
     net                          435         232       1,318         649
    Change in fair
     value of
     warrants                  (1,443)       (293)        415      (1,250)
                               ------        ----         ---      ------
  (Loss) income
   before income
   taxes                       (4,455)        413      (8,304)      3,378
    Income taxes                    -          26      (1,115)         26
                                  ---         ---      ------         ---
  Net (loss) income           $(4,455)       $387     $(7,189)     $3,352
                              =======        ====     =======      ======
  Net (loss) income per share:

    Basic                      $(0.14)      $0.01      $(0.24)      $0.12
                               ======       =====      ======       =====
    Diluted                    $(0.14)      $0.01      $(0.24)      $0.12
                               ======       =====      ======       =====
  Weighted average shares
   outstanding:

    Basic                  32,956,761  26,893,386  29,770,382  27,547,211
                           ==========  ==========  ==========  ==========


  MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
  CONSOLIDATED BALANCE SHEETS
  (In thousands, except share amounts)





                                                         October 31,
                                                         -----------
                                                          2009      2008
                                                          ----      ----
  ASSETS
  Current assets:
    Cash and cash equivalents                          $11,839    $5,505
    Due from factor                                      1,172         -
    Accounts and other receivables                       1,145     3,032
    Inventory                                            6,190     5,619
    Prepaid inventory                                    3,126       242
    Capitalized software development costs and
     license fees, current portion                       3,678     6,812
    Prepaid expenses                                       847     1,714
                                                           ---     -----
      Total current assets                              27,997    22,924
  Property and equipment - net                             447       563
  Other assets                                              83        83
                                                           ---       ---
      Total assets                                     $28,527   $23,570
                                                       =======   =======
  LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
    Accounts payable and accrued expenses               $9,356   $10,697
    Share-based litigation settlement                        -     1,250
    Due to factor                                            -       983
    Customer billings due to distribution partner          230     1,487
    Inventory financing payables                         6,053     1,540
    Advances from customers                                543       265
                                                           ---       ---
      Total current liabilities                         16,182    16,222
  Warrant liability                                        626       211
  Stockholders' equity:
    Common stock - $.001 par value; 250,000,000 share
     authorized; 38,553,740 and 30,127,950 issued and
     outstanding at October 31, 2009 and October 31,
     2008 respectively                                      38        30
    Additional paid in capital                         113,484   101,722
    Accumulated deficit                               (101,361) (94,172)
    Accumulated other comprehensive loss                  (442)     (443)
                                                          ----      ----
      Net stockholders' equity                          11,719     7,137
                                                        ------     -----
      Total liabilities and stockholders' equity       $28,527   $23,570
                                                       =======   =======




  MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  (In thousands)





                                                   2009     2008     2007
                                                   ----     ----     ----
  CASH FLOWS FROM OPERATING ACTIVITIES

  Net (loss) income                             $(7,189)  $3,352  $(4,770)
  Adjustments to reconcile net (loss) income to
   net cash (used in) provided by operating
   activities:
    Change in fair value of warrants                415   (1,250)    (611)
    Depreciation and amortization                   263      315      296
    Provision for price protection                5,363    2,556    1,953
    Amortization of software development
     costs and prepaid license fees              13,418    6,122    3,116
    Non-cash compensation expense                 1,730    1,558    1,505
    Warrants issued for services                      -       77        -
    Write-off of accounts receivable                  -      255        -
    Share-based litigation settlement               404   (1,572)   2,822
    Gain on settlements                               -        -     (266)
    Loss on impairment of software
     development costs                            3,481      101      154
  Changes in operating assets and liabilities:
      Due to/from factor - net                   (7,186)  (3,100)     763
      Accounts and other receivables              1,368   (2,806)   2,433
      Inventory                                    (412)  (1,769)  (1,412)
      Capitalized software development
       costs and prepaid license fees           (13,741) (10,362)  (4,501)
      Prepaid expenses                           (2,001)    (833)   1,097
      Other assets                                    -      (17)     (18)
      Accounts payable and accrued expenses        (779)   3,314   (2,791)
      Litigation settlement                        (700)       -        -
      Customer billings due to distribution
       partner                                   (1,257)   1,487        -
      Advances from customers                       245     (126)    (536)
                                                    ---     ----     ----
        Net cash (used in) provided by
         operating activities                    (6,578)  (2,698)    (766)
                                                 ------   ------     ----
  CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of property and equipment              (146)    (314)    (163)
                                                   ----     ----     ----
    Net cash used in investing activities          (146)    (314)    (163)
                                                   ----     ----     ----
  CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from exercise of stock
   options                                            -        -       49
  Sale of common stock                            8,627        -        -
  Treasury stock                                      -      (72)       -
  Inventory financing                             4,514    1,540   (1,390)
  Proceeds from private placement, net
   of expenses                                        -      (40)   5,819
                                                    ---      ---    -----
    Net cash provided by financing
     activities                                  13,141    1,428    4,478
                                                 ------    -----    -----
  Effect of exchange rates on cash and
   cash equivalents                                 (83)    (188)     (66)
                                                    ---     ----      ---
  Net (decrease) increase in cash and
   cash equivalents                               6,334   (1,772)   3,483
  Cash and cash equivalents - beginning
   of period                                      5,505    7,277    3,794
                                                  -----    -----    -----
  Cash and cash equivalents - end of
   year                                         $11,839   $5,505   $7,277
                                                =======   ======   ======
  SUPPLEMENTAL CASH FLOW INFORMATION
  Cash paid during the year for
   interest                                      $1,322     $676   $1,638
                                                 ======     ====   ======
  Cash paid during the year for income
   taxes                                             $1        -        -
                                                    ===      ===      ===
  SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING
   AND FINANCING ACTIVITIES
  Issuance of common stock in payment
   of accounts payable                             $459       $-     $365
                                                   ====      ===     ====
  Issuance of common stock for assets                 -        -       11
                                                    ===      ===      ===
  Change in warrant liability incurred
   on private placement                            $415  $(1,250)  $2,071
                                                   ====  =======   ======




  MAJESCO ENTERTAINMENT COMPANY
  RECONCILIATION OF GAAP to NON-GAAP FINANCIAL MEASURES
  (in thousands, except share amounts)
  (Unaudited)







                        Three Months Ended           Twelve Months Ended
                            October 31                   October 31
                            ----------                   ----------
                         2009           2008        2009             2008
                         ----           ----        ----             ----

   GAAP operating
    (loss) income     $(5,463)          $352     $(6,571)          $2,777
   Settlement of
    litigation and
    related
    charges, net
    (1)                     -         (1,250)        404           (1,572)
   Non-Cash
    Compensation
    (3)                   475            439       1,730            1,557
   California
    studio (4)              -             42       1,404              403
                          ---            ---       -----              ---
   Non-GAAP
    operating
    (loss) income     $(4,988)         $(417)    $(3,033)          $3,165
                      =======          =====     =======           ======

   GAAP net (loss)
    income            $(4,455)          $387     $(7,189)          $3,352
   Settlement of
    litigation and
    related
    charges, net(1)         -         (1,250)        404           (1,572)
   Change in fair
    value of
    warrants (2)       (1,443)          (293)        415           (1,250)
   Non-Cash
    Compensation(3)       475            439       1,730            1,557
   California
    studio (4)              -             42       1,404              403
   Net proceeds
    from sale of
    NJ state
    operating loss
    carryforwards(5)        -              -      (1,115)               -
                          ---            ---      ------              ---
   Non-GAAP net
    (loss) income     $(5,423)         $(675)    $(4,351)          $2,490
                      =======          =====     =======           ======

   GAAP net (loss)
    income per
    diluted share      $(0.14)         $0.01      $(0.24)           $0.12
   Settlement of
    litigation and
    related
    charges, net(1)      0.00          (0.05)       0.01            (0.06)
   Change in fair
    value of
    warrants (2)        (0.04)         (0.01)       0.01            (0.04)
   Non-Cash
    Compensation(3)      0.01           0.02        0.06             0.06
   California
    studio (4)           0.00           0.00        0.05             0.01
   Net proceeds
    from sale of
    NJ state
    operating loss
    carryforwards
    (5)                     -              -       (0.04)               -
                          ---            ---       -----              ---
   Non-GAAP net
    (loss) income
    per diluted
    share              $(0.16)        $(0.03)     $(0.15)           $0.09
                       ======         ======      ======            =====

   Shares used in
    GAAP and Non-
    GAAP per
     diluted share
      amounts      32,956,761     26,893,386  29,770,382       27,547,211
                   ----------     ----------  ----------       ----------

  (1)  Represents charges to settle certain litigations pending in the
  United States District Court, District of New Jersey:  (i) a securities
  class action brought on behalf of a purported class of purchasers of the
  Company's securities; (ii) a private securities action filed by Trinad
  Capital Master Fund, Ltd.; and (iii) a second action filed by Trinad
  purportedly on behalf of the Company.  All three actions are now
  concluded.

  (2) Represents the change in the fair value of warrants, classified as a
  liability. The fair value of the warrants is calculated at each balance
  sheet date with a corresponding charge or credit to earnings for the
  amount of the change in fair value.

  (3) Represents expenses recorded for stock compensation expense in
  accordance with SFAS 123R. The Company does not consider stock-based
  compensation charges when evaluating business performance and management
  does not consider stock-based compensation expense in evaluating its short
  and long-term operating plans.

  (4)  Represents operating expenses related to our internal development
  studio in California, which were not allocated to capitalizable projects.
  After evaluation of the studio's performance, and changes in the
  availability and cost of development with our third party partners, we now
  believe that closing the studio and taking advantage of these external
  opportunities represents a better value for the Company.

  (5) In November 2008, the Company received net proceeds of approximately
  $1.1 million from the sale of the rights to approximately $14.2 million of
  New Jersey state income tax  operating loss carryforwards, under the
  Technology Business Tax Certificate Program administered by the New Jersey
  Economic Development Authority.  The amount represents utilization of
  approximately 34% of the $41.0 million of net operating loss carryforwards
  available to the company in the state of New Jersey, prior to the
  transfer.  The amount has been recorded as an income tax benefit during
  the twelve months ended October 31, 2009.


DATASOURCE: Majesco Entertainment Company



CONTACT:  John Gross, Chief Financial Officer, Majesco Entertainment

Company, [phone]; or Mike Smargiassi, or Denise Roche, both of

Brainerd Communicators, Inc., [phone]



Web Site:  http://www.majescoentertainment.com/ 

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